As North Carolina governing members you have a huge responsibility to ensure that you are familiar with each and every case of special tax treatment in your county.
With over sixty classes of real or personal property currently entitled to tax exemption, exclusion, or taxation at a reduced rate, this can be quite a challenge.
To help, this week we are reviewing the Circuit Breaker Benefit to remind you what criteria must be met for this North Carolina property tax deferment program.
Circuit Breaker Benefit
According to the NC General Statute 105-277.1B, this program is for qualifying elderly and disabled homeowners. Those who are eligible can apply for tax relief by deferring a portion of the North Carolina property tax assessed on their primary residence.
Under this program, taxes for each year are limited to a percentage of the owner’s income. Taxes above the limitation are deferred until a future date.
According to the NC Department of Health and Human Services, the following must be true in order for the circuit breaker benefit for North Carolina property tax relief to apply:
- The home owner must be a NC resident.
- The applicant must be at least 65 years of age OR totally and permanently disabled.
- The owner must file an application for the Circuit Breaker program annually.
- If both husband and wife are the sole owners, only one application is required each year.
- For joint property owners who are not married, each owner must file an application separately.
- All property owners must have owned and occupied the residence for the previous five years.
- The previous year’s total income for both an applicant and spouse cannot exceed $40, 650.
- If a disqualifying event occurs, the last three years of deferred North Carolina property taxes become payable with interest.
- Disqualifying events include death of the owner, transfer of the property to someone who is not a qualifying owner, or if the owner fails to use the property as their permanent residence.
- For an owner whose income does not exceed $27, 100, their taxes will be limited to 4% of their income.
- For an owner whose income exceeds $27,100 but does not exceed $40,650, their taxes will be limited to 5% of their income.
Review the Circuit Breaker tax exemption rules above and check back as we examine more North Carolina property tax exclusions in the weeks to come!